Today is May 3, 2006

Our current signal is BUY

This signal was initiated after the close on June 27, 2005

By the end of the week, the stock market should resume its upmove. We are to the point that there is enormous pressure (from a technical standpoint) for the markets to continue higher. As our model is still long and as we believe the markets will continue higher, our current view is that the stock market will show strength starting tomorrow or Friday.

The first two charts (NASDAQ Composite and NASDAQ 100) have Fibonacci retracements from the March 2006 upmove. You can notice how the NASDAQ Composite is currently sitting right on top of the support line we have talked about for weeks now. As the 61.8% retracement from the March move is exactly at this point, we believe the NASDAQ Composite's short-term pullback is now over. You can notice on the second chart how the 61.8% Fibonacci retracement has also been reached on the NASDAQ 100. Both of these areas also have major horizontal support. If the uptrend from March 2006 is going to continue (and we think it will) these two indices will have to bounce off of this support by the end of the week.

The third chart is of the S&P 500. Besides the inverted head and shoulder pattern indicated on the chart, there is a micro-term inverted head and shoulder happening right now as well. We indicated this on the chart with the two orange trendlines. You can see how the S&P 500 is also at an important juncture, and as our model is long, we expect it to resolve to the upside within the next two days.

The final chart is of the Russell 2000. The index found support on our support line and is still sitting above the uptrend line. As we believe this line will stay under the index, we do not expect the Russell 2000 to fall below 760.

We have had to patient as the stock market was consolidating before its next move. With the current technical pressure, the indices should be moving higher by the end of the week.

Take Care,

Stephen Brown
Founder of Nasdaq Wizard, LLC